Launch of the Euro
Delivered in Plenary 16th January 2002
The launch of the notes and coins has finally made the Euro a political reality for the 300 million people of Euroland. Coming from a country which is out and a party which opposes joining I was half expecting more glitches and popular resent at the imposition of an unfamiliar currency. So far so good, with little inflationary rounding-up, and I congratulate the ECB, Commission, and National central banks in their handling of the logistics of this massive undertaking, without any upsurge of armed robbery, or counterfeiting although I still question the need for a 500 Euro note which can only facilitate criminality.
The naturally cautious British Conservatives position, although accepting the Euro may be an added convenience to travellers and improve price transparency in the Single Market, has no doubt that this is primarily intended to bolster pan-European identity as a stepping stone to further political integration, as admitted to by everybody bar Mr Blair, and beyond control of just monetary policy to also that of taxation. The "one size fits all" monetary policy as admitted by the pessimistic Commission 2001 Economic Report cannot be right for all of the countries all of the time and coupled to the Fiscal constraints of the Stability and Growth Pact poses severe destabilising problems and lack of flexibility to certain economies as we have already seen in the artificial boom scenario of Ireland.
The risks will only get bigger of an assymetric shock developing after enlargement as European Labour markets remain unreformed and largely immobile. President Prodi has admitted this inherent risk, and the call will come shortly for a much bigger EU budget and direct EU taxes to set-up bail-out funds to compensate affected countries for their loss of rights to devalue their currencies or lower interest rates.
Nevertheless I wish the Euro well as the currency of our major trading partners, meaning that UK prosperity is also affected by its stability, and I hope that my pessimistic prognosis which echoes the Commisions own proves to be wrong over time.
I would also like confirmation from the Commissioner that in his opinion for the UK to join the EURO it will have to spend 2 years in the ERM II phase first.